Sponsored Product Ads – A tool for engaging your sellers
For your marketplace sellers the main purpose of the Sponsored Product Ads it to get more visibility, more clicks and more sales.
For the marketplace the main purpose of Sponsored Product Ads is to generate incremental revenue from the extra visibility, clicks and sales.
However there is one other very important purpose that Sponsored Product Ads can help you achieve – Sellers engagement and retention.
A year and a half ago, during his talk in an eCommerce media event in NY (NYknowgo), Jerome Cochet, former Head of Zalando Media Solutions, explained how offering Sponsored Product Ads on Zalando had another important role besides making incremental revenues from selling the ads and that was to strengthen the relationships with the merchants and brands that they were selling.
First of all by offering your sellers and brand partners to run Sponsored Product Ads your eCommerce site doesn’t only play a role in their sales but also in marketing.
Your marketplace becomes a marketing channel for your sellers and if it works properly and gets good results in terms of ROAS and ACOS you just gave them another reason to stay with you and engage more.
Secondly having an option to offer your sellers to promote their products with Sponsored Product Ads is a great tool for retention and engagement.
What would make you stay with us?
Sellers retention is maybe the most important part of the marketplace sellers acquisition funnel.
Sure it is hard and expensive to acquire and activate new sellers but once you succeed and get them on board it is much more frustrating loosing them (especially given that it’s not that hard to prevent it).
That’s why in the world of business growth, it’s often said that customer retention is as or more important than customer acquisition.
A study that was conducted 2 years ago by Brian Solis (Kahuna) found that the three main reasons for seller disengagement from marketplaces are insufficient competitive differentiation (46%), insufficient sales (33%) and marketplace service fees (31%).
In the same study the marketplaces pointed out these top 3 methods for retaining marketplace sellers: Advertising (ranks the top investment with 47%), Social media/content follows with 25%, and third in the list is “creating standalone value” at 24%, e.g., platform performance, enhancements and roadmaps. The publishers anticipated that this number would rise over time as marketplaces will need to be more than just “commerce as a service” for sellers.
Adding Sponsored Product Ads to your marketplace seller engagement toolkit is a “standalone value” that can help sellers increase sales (and by that reduce the churn rate due to insufficient sales).
Nobody can find my products!
A seller that complains that he doesn’t have enough sales will usually also complain that he is not getting enough visibility in the marketplace and that his competitors are getting the best placements in the store.
The first aid medicine for these sellers that are considering leaving your marketplace is giving them more visibility and this is exactly what Sponsored Product Ads do!
“You are not getting enough impressions? Try to do Sponsored Product Ads! You will reach more impressions, more clicks and hopefully more sales. It will also get you more reviews and therefor help your conversion rate and your organic results”
This tool that is usually offered on a Pay Per Click basis to the sellers can also be offered for free to retain them. Many marketplaces offer a free welcome coupon or Try Me plans for new sellers so there is no reason not to use these free coupons as a retention tool.
Don’t wait for the last minute
Before reaching the point where you need to use Sponsored Product Ads as a tool for preventing churn you should use it to strengthen your relationship with your brand partners and sellers.
This can be a great tool for your account managers to engage them and stay in touch.
“Hey, I see that you are running a summer sale on your new collection. Why don’t you give it a boost with some Sponsored Product Ads?” and if you really want to be nice to this seller you can add: “I have just added some free credits to your account. Let me know how it goes or if you need some advice on your campaign”.
Jeff Nolan, former chief marketing officer at Kahuna also described the importance of identifying sellers that might churn before they do so and engage them: “To improve retention rates, marketplaces need to be focusing their efforts on the buyers and sellers who are most likely to churn. By becoming more targeted in this way, marketplaces can personalize communications in a way that addresses the most likely reason a given buyer or seller might decide to disengage, thereby drawing them back into the marketplace at a crucial time in their customer journey.”
Not all sellers are equal. The good old Pareto principle plays its role also in the marketplace space.
10%-20% of your marketplace sellers are probably responsible for 80%-90% of your GMV.
These sellers deserve more attention and more effort in retention.
some marketplaces use the Sponsored Product Ads as a tool to differentiate these sellers from the others.
On Amazon for example only pro sellers are eligible to run Sponsored Product Ads , In other marketplaces some ad types (like Sponsored Brand Ads) are restricted only to the top sellers (while the other sellers can only run Sponsored Product Ads), and in some marketplaces some slots (the top result in the search result page for example) are reserved for the premium sellers (while the other sellers can compete on all the other positions).
Clearly the pricing of the ads can also vary – For example you can offer top sellers to buy bundles that include credits for Sponsored Product Ads in a reduced price etc.
So when you need tools to indulge and retain your top sellers the sponsored Product Ads can be very useful.
It’s (not) all bout the money
So while the main goal of Sponsored Product Ads is to generate incremental revenue by transforming your eCommerce site into a great marketing channel for your brand partners and sellers and into a paid clicks generator, it has another very important part.
Sponsored Product Ads can help you make your brand partners and sellers happy, keep them in the loop, strengthen your relationship and reduce their churn rate.
However, this important goal can only be achieved if you sell the sponsored product ads directly via your own ads service and by your in-house account managers (and not as part of an ad network where you have no direct relations with the advertisers).
Mabaya is the leading self-service, white-label Sponsored Product Ads platform for marketplaces and online retailers. More than 50,000 sellers and brand partners in more than 30 leading eCommerce sites around the globe (25 countries and counting) are using our platform to run their e-commerce media campaigns. For more info: www.mabaya.com.